Relocation: Where’s the value?

The concept of the value chain, well known in the business world generally, is rather less so in the relocation and mobility context.

18 July 2014

The concept of the value chain, well known in the business world generally, is rather less so in the relocation and mobility context.Andrew Fearne, professor of Value Chain Management at Kent Business school explains its potential for identifying opportunities for improvement and its huge value for organisations relocating employees and for their service providers:The tough global trading environment in which the majority of companies are competing continues to fuel the pursuit of sustainable business models. International companies face stiff competition, and it is essential that they deploy project teams quickly and efficiently to get the job done. Leading-edge companies of all sizes see providing international experience as imperative for the development of future leaders.In either case, managing and retaining talent is crucial to the business, and it is usually the responsibility of HR managers or HR mobility specialists to organise domestic relocations or international assignments.Today’s management teams, however, ensure that no stone is left unturned as businesses look to reduce their costs, shorten their response times and add more value – without compromising their commitment to compliance or corporate social responsibility, of course.For most firms, this means using their assets more efficiently and extracting more value wherever possible. The challenge that the majority struggle with is the inevitable trade-off between cutting costs and differentiation – doing more and/or better with less.Getting this right can give a business a genuine source of competitive advantage, but getting it wrong can be disastrous, and invariably results in a ‘race to the bottom’ in which everyone is a loser in the long run. In the relocation scenario, this can lead to disaffected talent who may leave to join the competition.This represents a real challenge for service providers in the relocation and global mobility sector, as customers expect and demand better service at more competitive rates. The problem is that few companies understand where the value is added in the complex global relocation supply chain. This often results in employers cutting corners, to the detriment of their employees, and service providers investing in areas that, at best, are necessary but add no value, and, at worst, are wasteful and should be cut altogether.This is the conclusion that students from Kent Business School reached following their analysis of the relocation supply chain as part of their MSc in Value Chain Management, the results of which will be published in the autumn. Kent Business School is the only academic institution in the world teaching this discipline, which is so vital to supporting economic growth.The course is taught by academics from a variety of disciplines, all of whom are internationally recognised experts, and the content is informed by research undertaken within the Centre for Value Chain Research (www.kent.ac.uk/kbs/research/research-centres/cvcr/).Strengthening the chainValue Chain Analysis (VCA) is a diagnostic process designed to identify a chain’s strengths and weaknesses and highlight key areas for improvement, with the aim of making each member of the chain, and the chain as a whole, more competitive.It begins with the final consumer – the relocatee, expatriate or international assignee – and determines what is important to them in the relocation process – that is, what they value. This is a real blind spot for most companies, with service providers perceiving what they do as adding value, and managers perceiving the very same things as targets for cost cutting – a view that drives the business and procurement departments.HR is often caught in the middle, understanding the value but without the metrics to prove its case. For those service providers whose activities are necessary but do not add value in the eyes of the consumer, the focus should be on increasing the efficiency of existing operations and finding new services to offer that do add value.For those who provide services that the consumer values, the last thing they should be doing is cutting costs in their delivery and development. Rather, they need to up the ante on their marketing communications, to reinforce the perceived value of the service they are offering.For managers – the gatekeepers of success and drivers of value creation and efficiency gains – systematic cost reduction without consideration of the impact on relocates (in terms of their satisfaction and ability to perform their role) can result in short-term budget savings but longerterm loss of employee commitment and, ultimately, reduced levels of their own customer service and satisfaction.The reality is that employees, like consumers, are heterogeneous – they have different values, and value different things – which is why effective market segmentation and service differentiation are so important as a starting point in the pursuit of sustainable competitive advantage.The identification of perceived value from the consumer’s perspective enables companies to identify where value is added in the supply chain or service delivery process and determine the appropriate resource allocation. The effective flow of information between service providers, facilitated through collaborative trading relationships, is a critical success factor, and can be assessed through surveys and interviews with key stakeholders in the supply chain/service delivery process.The resulting diagnosis maps the service flow, information flow and relationship strength from beginning to end, highlighting, along the way, areas for improvement.The methodology is taught as part of the MSc in Value Chain Management and applied to a live supply chain, with the aid of a facilitator or champion. Previous projects have looked at the supply chains for mangoes, from Queensland to UK supermarkets, the maintenance of railway carriages, potted plants, and the delivery of short breaks for families with disabled children.This year, we have been looking at the complex world of global relocation, with the support of Fiona Murchie and the Re:locate team. The students have completed their data collection and presented their initial findings, and are now designing the improvement projects. The results will be presented in the autumn via a number of Re:locate media channels.In the meantime, we are widening the pilot study. Until 31 July, the Re:locate website will be hosting two global surveys, one for assignees and one for businesses.We would like to encourage as many organisations as possible to participate, on both the corporate and supplier side. Please also encourage your employee and expatriate community to take part.The more global information we have, the more market intelligence we can feed back, which will help promote the success of global mobility and the growth of your business.The data will be analysed by me, and the key findings will be reported exclusively by Re:locate.To take part in the survey, click hereFor further details, please contact Andrew Fearne at Kent Business School (a.fearne@kent.ac.uk) or Fiona Murchie at Re:locate (fiona@relocatemagazine.com).